Experian research reveals rising fraud losses are eroding dealership profits and complicating customer experience

Experian research reveals rising fraud losses are eroding dealership profits and complicating customer experience

(IN BRIEF) Experian’s new survey of automotive dealers shows that fraud is becoming a significant and growing threat to dealership profitability and operations, with nearly nine in ten dealers expressing concern and 70 percent reporting an increase in fraudulent transactions. Dealers estimate that an average of four fraudulent deals were completed before detection in the past year, often resulting in losses of $10,000–$20,000 or more, with insurance and lenders frequently covering less than half of the costs. The research highlights rising risks from income-related and identity-related fraud, while also revealing that many dealerships still rely on manual verification methods that can slow down transactions and frustrate customers. Experian argues that stronger, data-driven identity and income verification earlier in the sales process can reduce losses, improve efficiency, and create a smoother customer experience.

(PRESS RELEASE) LONDON, 3-Feb-2026 — /EuropaWire/ — Experian, a global leader in data and technology, has released new research highlighting how fraud is becoming an increasingly serious operational and financial challenge for automotive dealerships. Based on a comprehensive survey of dealers, the findings reveal that nearly nine out of ten respondents are concerned about fraud, while 70 percent believe fraudulent transactions are rising — signalling a clear and troubling upward trend across the industry.

The study underscores that fraud is no longer a marginal issue but a measurable threat to dealership profitability. Over the past 12 months, dealers reported that an average of four fraudulent transactions were completed before being detected. The financial impact of these incidents is substantial: 45 percent of dealers estimate that a single fraudulent deal typically results in losses of between $10,000 and $20,000, while 31 percent say their losses often exceed this range.

Dealerships are shouldering much of the financial burden, as traditional protections frequently fall short. Sixty-four percent of respondents reported that insurance covers less than half of their fraud-related losses. Meanwhile, 67 percent said lenders reimburse less than 50 percent of the costs, and 10 percent indicated they receive no compensation from lenders at all.

According to Jim Maguire, Experian’s senior director for automotive, a single fraudulent transaction can wipe out tens of thousands of dollars in profit, putting significant strain on dealership margins and long-term financial stability.

Beyond direct monetary losses, fraud is reshaping day-to-day dealership operations and affecting the customer experience. Three out of four dealers say auto-finance fraud is disrupting their business processes. More than half (53 percent) identify balancing effective fraud prevention with a smooth, fast customer journey as their biggest challenge, while 46 percent report that additional verification steps slow down transactions and frustrate buyers.

The research also categorises automotive fraud into three main types: income-related, vehicle-related, and identity-related. Income fraud remains the most common, with 62 percent of dealers encountering forged income documents and 50 percent seeing fabricated income claims.

However, identity-related fraud is rapidly emerging as one of the fastest-growing risks. Forty-four percent of dealers reported dealing with synthetic identity attempts, and 43 percent have encountered third-party or straw borrower fraud within the past year.

Despite these risks, nearly half of dealers (46 percent) only verify income when something appears suspicious. Manual verification methods remain widespread, with 67 percent of dealerships using driver’s license scanners and 63 percent relying on photocopies of identification. Experian warns that these approaches can increase friction for legitimate customers while still leaving dealerships vulnerable to sophisticated document manipulation.

Maguire emphasises that fraud is no longer just a risk management issue but a profitability and customer experience problem. He argues that the most effective defence is to confirm identities early using multiple data sources, verify income and employment upfront, validate trade-in vehicle details, and flag inconsistencies before deals are finalised. Dealers that adopt advanced fraud-detection tools are better positioned to minimise losses while maintaining a smoother purchasing experience.

Experian will be showcasing its fraud prevention solutions at the National Automobile Dealers Association (NADA) Show in Las Vegas from February 3 to 6, at booth 4613W. The full report is available on Experian’s website.

About Experian

Experian is a global data and technology company, powering opportunities for people and businesses around the world. We help to redefine lending practices, uncover and prevent fraud, simplify healthcare, deliver digital marketing solutions, and gain deeper insights into the automotive market, all using our unique combination of data, analytics and software. We also assist millions of people to realize their financial goals and help them to save time and money.

We operate across a range of markets, from financial services to healthcare, automotive, agrifinance, insurance, and many more industry segments.

We invest in talented people and new advanced technologies to unlock the power of data and to innovate. A FTSE 100 Index company listed on the London Stock Exchange (EXPN), we have a team of 25,200 people across 33 countries. Our corporate headquarters are in Dublin, Ireland. Learn more at experianplc.com.

Media Contact:

Gerry Tschopp
Head of Global External Communications
+1 714 830 7756
+1 949 677 3377
gerry.tschopp@experian.com

SOURCE: Experian